First American Payment Systems LP has signed Lenoir, N.C.-based Parkway Bank as its 26th referral-bank partner, the Fort Worth, Texas-based independent sales organization announced Nov. 9.
In the deal, Parkway will promote First American’s payment-processing services to its commercial clients.
First American started its bank-referral program 18 months ago, Kevin Jones, the ISO’s vice president of sales and marketing, tells PaymentsSource.
Merchant trust of banks and better attrition rates from bank referrals are the two primary reasons for the ISO’s commitment to bank-referral deals, he says.
“With so many different types of [sales] agents walking through a merchant’s door, many merchants want to go to their banks because they trust their banks to do the due diligence,” Jones says. Banks check an ISO’s references, financial statements and other business data to verify the ISO’s credentials, he says.
Moreover, the attrition rate for merchant accounts opened through a bank referral is lower than some other acquisition methods, Jones says. “Usually when a merchant has that trust factor [with the bank], they’re not going to leave for a basis point or two” lower payment-processing rate, he says. A basis point is one-hundredth of a percentage point.
First American works with banks through various types of relationships. One, as with Parkway Bank, is when the bank refers all merchant inquiries directly to First American. In another model, the bank refers it merchant inquiries to a local First American agent office. A third method has the bank serve as a sales office for First American that sells the merchant account itself.
The mix appears to be working for First American. “We win about 70% of the merchants the banks refer to us,” Jones says.
ISOs rely on referrals, including from banks, trade groups and other sources, for 29% of their merchant clients, according to the Aite Group LLC’s “Merchant Acquiring In 2010” report released in November 2009 (
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